I opened some mail today from the bank that holds our home equity loan. You may recall me mentioning last September that the 5 years of no interest payments were up and now the terms were that the new monthly payment is 1.5% of the outstanding balance. So, my payment went up from $400 a month to almost $900. That's ok though because all that extra is going towards principal. Each month my principal balance goes down about $500 and each month that 1.5% monthly payment drops a bit, too.
The interest rate is 7.85% (I know OUCH!). The letter that came in the mail today said effective 1/31 the interest rate on this loan is dropping to 4%!!!!!!!!!
That is almost half. I was in my car when I opened the letter. I was dancing in my seat!
It won't make my monthly payment go down a whole bunch, BUT instead of now almost $400 a month interest it will be around $200 and that extra will also go towards principal. WOOO!! I plugged the new interest rate in my amortization schedule spreadsheet and in less than 5 years I will save over $8000 in interest. Of course that's if we actually stayed here that long, which isn't very likely, but still super news for me each month until then.
That's some great news, even if you don't stay there much longer, every little bit help. 8-)
ReplyDeleteIt does really help! I have no idea why it changed, but I think this part of the loan terms are maybe a variable interest rate. I have been wanting to refinance both our first mortgage and the HELOC, but we need 65% LTV and I don't know if we are quite there yet. I'd hate to pay for an appraisal and find out we are still short. At least now we are getting there faster.
DeleteThat's great news! I'm a new reader and am still catching up on your old posts but wanted to say Hi! =) I really like your blog and see that we have a lot in common (or at least did in your past years...Moms helping out, MS in the family (that's me in mine!), just trying to do what we can to keep our heads above water in our own ways, etc.
ReplyDeleteEvery little bit helps so it's great that you got some good news! =)
Thanks for commenting TrayceeBee! I have been reading your blog too. I hope your hubby finds a new job soon.
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